Yesterday’s Market Activity
- Stocks continued sideways move after Tuesday selloff. S&P 500 flat, Nasdaq +0.1%, Dow -0.1%.
- Financials lagged as insurers sold off on potential hurricane-related exposure; telecommunications also added to year-to-date (YTD) losses. Healthcare led sector gains, hitting new YTD highs vs. S&P 500.
- 10-year Treasury yield -5 basis points (0.05%) to 2.05% after dovish comments from European Central Bank (ECB) President Mario Draghi.
- Commodities – Industrial metals were mixed; copper slipped modestly. COMEX gold +0.8% to $1350/oz. on dollar weakness. WTI crude oil -0.2% to ~$49/bbl
- Jobless claims spiked (298K vs. 245K consensus and 236K prior week), spike due to Harvey’s impact.
Overnight & This Morning
- Major U.S. indexes opened mixed with focus on recent debt ceiling deal and ahead of another major hurricane set for landfall over the weekend.
- Asian stocks mixed with MSCI Asia-Pacific Index +0.4% as Shanghai Composite -0.1%, Nikkei -0.6% as gross domestic product (GDP) missed estimates and yen strengthened, weighing on exporters.
- European stocks adding to Thursday’s modest gains (details below), led by miners, travel related companies. STOXX Europe 600 +0.3%. Sovereign bonds slipped, euro ($1.20) remains near highest level in ~3 years after ECB yesterday didn’t address recent strength.
- U.K. July manufacturing up for first time in 2017 to +0.5% on rebound in auto production. U.K. growth forecasts for 2018, 2019 cut by 0.1% to 1.2% and 1.4%, respectively; full year 2017 forecast revised up slightly (+0.1%) to +1.6%.
- 10-year Treasury yield little changed, European sovereigns higher (yields lower), Japan yields slipped into negative territory.
- Commodities – Oil on track for first weekly gain since early July, helped by rebound in refiners boosting demand. COMEX Gold modestly higher, near 1-year high. Agricultural continues higher ahead of hurricane taking aim at Florida, industrial metals again mixed.
- Market leadership continues to shift as the healthcare sector hit new absolute and relative highs versus the S&P 500 Index. Biotechnology stocks are at their highest levels in over two years and small cap healthcare stocks are also working well for investors, which is one of the lone groups supporting small caps. We look for these trends to persist. More recent trends in the financial sector, which has been hit very hard with more than three quarters of the S&P 500 sector’s components trading near or below 20-day lows, suggest opportunities may be present as this indicator has historically proven to be an extreme, climactic occurrence.
- Harker* (Hawk)
- Germany: Trade Balance (July)
- Germany: Imports & Exports (July)
- France: Industrial Production (July)
- UK: Industrial Production (July)
- UK: Trade Balance (July)
- Bank of England: Inflation Expectation Survey Next 12 Months
- China: CPI (Aug)
- China: PPI (Aug)
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